The effect of board independence on dividend payouts: A quasi-natural experiment
Motivated by agency theory, we investigate the effect of board independence on dividend policy. We exploit as a quasi-natural experiment the passage of the Sarbanes-Oxley Act and the associated exchange listing requirement, mandating firms to have a majority of independent directors. Our difference-...
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th-mahidol.875262023-06-22T17:41:54Z The effect of board independence on dividend payouts: A quasi-natural experiment Chintrakarn P. Mahidol University Economics, Econometrics and Finance Motivated by agency theory, we investigate the effect of board independence on dividend policy. We exploit as a quasi-natural experiment the passage of the Sarbanes-Oxley Act and the associated exchange listing requirement, mandating firms to have a majority of independent directors. Our difference-in-difference estimates show that firms forced to raise board independence are significantly more likely to pay dividends than firms not required to change board independence. Our results are consistent with the notion that stronger board independence forces managers to disgorge more cash to shareholders, thereby reducing what is left for possible expropriation by opportunistic managers. Based on an exogenous regulatory shock, our results are more likely to show a casual effect, rather than merely an association. 2023-06-22T10:41:54Z 2023-06-22T10:41:54Z 2022-11-01 Article North American Journal of Economics and Finance Vol.63 (2022) 10.1016/j.najef.2022.101836 10629408 2-s2.0-85142195502 https://repository.li.mahidol.ac.th/handle/123456789/87526 SCOPUS |
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Economics, Econometrics and Finance Chintrakarn P. The effect of board independence on dividend payouts: A quasi-natural experiment |
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Motivated by agency theory, we investigate the effect of board independence on dividend policy. We exploit as a quasi-natural experiment the passage of the Sarbanes-Oxley Act and the associated exchange listing requirement, mandating firms to have a majority of independent directors. Our difference-in-difference estimates show that firms forced to raise board independence are significantly more likely to pay dividends than firms not required to change board independence. Our results are consistent with the notion that stronger board independence forces managers to disgorge more cash to shareholders, thereby reducing what is left for possible expropriation by opportunistic managers. Based on an exogenous regulatory shock, our results are more likely to show a casual effect, rather than merely an association. |
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Mahidol University |
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Mahidol University Chintrakarn P. |
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Chintrakarn P. |
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Chintrakarn P. |
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The effect of board independence on dividend payouts: A quasi-natural experiment |
title_short |
The effect of board independence on dividend payouts: A quasi-natural experiment |
title_full |
The effect of board independence on dividend payouts: A quasi-natural experiment |
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The effect of board independence on dividend payouts: A quasi-natural experiment |
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The effect of board independence on dividend payouts: A quasi-natural experiment |
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effect of board independence on dividend payouts: a quasi-natural experiment |
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2023 |
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https://repository.li.mahidol.ac.th/handle/123456789/87526 |
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